I always enjoy the conversations I have each day with those running businesses, charities and other organisations here in the East Midlands, writes Alistair Cunningham, agent for the Bank of England in the East Midlands.

These discussions provide an up-to-the-minute insight into what’s really happening in the economy across the United Kingdom.

And at the moment there’s certainly no shortage of things to talk about – whether that’s the prospect of Brexit, the rise in inflation or the challenge of finding skilled staff.

The information gathered by me and my colleagues in the Bank of England’s Agency network feeds directly into our policymakers in London as they make

decisions on how best to guide the economy through these somewhat uncertain times.

The Bank recently published its August Inflation Report, its latest quarterly assessment of the outlook for the economy.

Alastair Cunningham, Agent for the Bank of England in the East Midlands

It also announced that Bank Rate, which is a reference point that banks use when setting interest rates on savings and loan products used by households and businesses, would remain on hold for the time being at 0.25 per cent.

The Monetary Policy Committee – which sets Bank Rate – also said the rate would likely have to rise in the coming years in order for the MPC to hit its 2 per cent inflation target.

Inflation is currently above that figure, largely because the value of the pound fell sharply following the vote to leave the European Union.

Weaker sterling makes imports more expensive for UK companies and that has resulted in higher prices for UK households.

We expect inflation to peak towards the end of this year at around 3 per cent, before falling back towards 2 per cent.

Meanwhile, wages have increased more slowly than inflation, so households’ real spending power has been squeezed.

"We expect growth to be a bit slower than last year, mainly due to weaker household spending" (Image: Norasit Kaewsai)

At the same time, unemployment levels are the lowest they have been since the 1970s, which means many companies are finding it harder to recruit new staff.

It’s a story I hear frequently when I speak to employers in Leicestershire who tell me that finding the right people is getting harder – for a wide range of jobs and skills – particularly in engineering, construction and professional services.

In some cases, firms are responding by increasing wages.

The Monetary Policy Committee expects that wage increases will pick up in the coming years.

Along with the fall back in inflation, these rising wages should support household spending.

We expect UK growth to be a bit slower this year than last, mainly due to the weakness in household spending.

But there are other factors that are helping UK growth, including a stronger outlook for exports.